Re: unions, EO & privatization

["Tim Mitchell" <pentim@netspace.net.au>]

Thanks to Michael and Dan for your insightful comments re unions' legitimate
expectations in any privatisation process that may or may not involve an
ESOP.

I found you enunciated clearly what I had been thinking.

>From the Australian perspective it is amazing to see how far down the track
US unions have gone in thinking about these issues.

Australian unions may be relatively strong in numbers proportionally,
compared to their US counterparts, but I think this strength and the
favourable industrial laws that have existed in this country have been their
downfall in the era of the corporation.

Now they find themselves facing declining membership and corporate
downsizing, with threadbare resources, let alone the luxury of having people
who can think through and articulate a union driven ESOP strategy.

Cheers

Tim










-----Original Message-----
From: Michael Polzin <polzinm@pilot.msu.edu>
To: 'EOpriv@cog.kent.edu' <EOpriv@cog.kent.edu>
Date: Friday, 15,October, 1999 01:39
Subject: RE: unions, EO & privatization


>This note is in response to Dan Bell's comments of October 6 concerning the
>role of unions in ESOP privatizations.  Dan did a very good job of
>identifying union interests pertaining to the privatization process as well
>as in the new ESOP.  I don't have anything to add to his thoughts. I do
> want to add a couple of comments about the exploration process that leads
>to the actual privatization effort.  Before I do that, however, I should
>offer an introduction so that there is some context to my comments.
>
>I am currently an assistant professor in the School of Labor Relations at
>Michigan State University and also the administrator of PIERS, the Program
>on Innovative Employment Relations Systems, an outreach(extension)  unit of
>the School that works only with unionized organizations on joint
>labor-management change initiatives. Prior to joining the faculty at MSU I
>was the Coordinator of the (state of) Michigan Center for Employee
>Ownership and Gainsharing and worked with Jim Houck promoting those
>concepts to business and union leaders around the state.  Prior to that I
>was on staff with PACE of Philadelphia, Inc. (the Philadelphia Association
>for Cooperative Enterprise), a consulting firm that developed unionized,
>democratic employee owned businesses.
>
>Now, to the comments.  Union involvement should begin as early in the
>exploration process as possible.  The change from a state-owned enterprise
>to a privately held enterprise is a big one for people who have joined
>together for job security, equal and fair treatment and access to good
>wages and benefits. In some cases, even a bad situation is deemed
>preferable to an uncertain one and transforming ownership from state-owned
>to private is, if nothing else, filled with uncertainty in workers' eyes.
>
>The process often starts with an exploration of interest even before a
>preliminary feasibility study is conducted.  So we find ourselves asking
>people if they would consider a different ownership structure even before
>they have any idea of how many people will remain employed, what wages and
>benefits will be, what the costs will be to them, and what their work life
>will be like.  Often, the question of interest is met with resistance from
>the union and for good reason.  If the question is brought to the workers
>and the union by management or by management consultants, the resistance
>may become greater out of concern that the effort will be manipulated in
>ways that will further undermine the interests of workers and the union.
>
>The union may want to fight the privatization effort before they are even
>willing to consider an ownership transition that includes a share to
>workers. And there may be good reason to fight it.  There are numerous
>allegations of services or agencies being privatized (not to ESOPs) where
>the cost of service increases and the most difficult services, or services
>to the most-in-need citizens, are eliminated because they are also the most
>expensive to provide.  Or, some privatizations may have resulted in loss of
> jobs, major worker  concessions,  significant work  speed-up, or resulted
>in even less voice for workers than they had under the previous ownership
>structure even though the new private company was quite profitable.   A
>faculty member in our College of Social Science, who is a former state
>representative, argues very effectively that privatization undermines
>public control over the service provided and threatens the accountability
>that is such a central element of democratic government.  With those
>apprehensions in mind, some unions might need, politically and
>pragmatically,  to explore non-privatizing alternatives before they can
>consider anything else. Regardless, it is likely to be important to many
>unions that any exploration of alternatives to the status quo be
>broad-based and consider options that include but are not limited to
>private ownership with an ESOP structure.  That may be necessary in order
>for the union to have a beginning level of trust in the process and trust
>in the parties that are bringing the opportunity for change to the table.
>
>Thus, it is imperative, in a unionized organization, that the union be
>involved in exploratory discussions at the earliest opportunity and that
>the union be made full partners in the exploration, feasibility, design,
>development, and implementation process. If they are not partners, then
>resistance is likely to increase.  If they are partners and if the
>feasibility study is favorable, their collective expertise will be
>invaluable in creating a solid foundation for a successful enterprise.
>
>Michael J. Polzin
>Assistant Professor and Administrator, PIERS
>School of Labor and Industrial Relations
>Michigan State University
>418 S. Kedzie
>East Lansing, MI 48824   USA
>517-432-1288
>FAX:  517.355.7656
>polzinm@msu.edu
>http://www.lir.msu.edu
>
>
>